BBB warns against fraudulent debt collection

A new wave of fraud is impacting those hardest hit by the recession. scammers are calling unsuspecting people and falsely claiming that they have defaulted on payday loans and are in danger of being arrested.

The callers have been telling their victims that they're in positions of legal authority representing organizations with official-sounding names such as the "Financial Accountability Association" or the "Federal Legislation of Unsecured Loans." They threaten that adverse action will be taken if they don't pay immediately.

However, in reality the callers are just trying to get their victims to disclose their credit card numbers and bank account information to make payments on their phony debts. To make their stories more convincing, some of the scammers have managed to secure personal details about their victims such as identification numbers and previous addresses.

“Because the scammers have so much information about potential victims, BBB is concerned that this may be the result of a data breach,” says Steve Cox, a Better Business Bureau spokesperson, in a statement.

To protect themselves more effectively against fraud, consumers can avoid giving out financial information over the phone unless the are sure the transaction is secure. Referencing Better Business Bureau records or filing a complaint with them regarding suspicious activity can also guard against future problems.

To learn more about filing a complaint, visit this informational site. To get more information from the BBB regarding the latest payday loan caller scam, including telephone numbers they have reportedly called from, click here.

--Bridget O'Sullivan

Suspected fraud fuels sub-prime mortgage hysteria

As the sub-prime mortgage situation continues to worsen, the FBI confirms that they're investigating lenders for possible fraud. According to articles in The Wall Street Journal and CNN Money, Countrywide Financial Corporation could be involved in the suspected fraud within the industry.

The company’s practices of representing their losses and underwriting loans are said to be under examination. In addition, the company has also come under scrutiny after sending out letters to customers this week informing them that some personal data may have been compromised.

A former employee is cited as the cause of the leak and Countrywide is providing two years of credit monitoring services for free to customers believed to be impacted. This comes at a difficult time for Countrywide, the country’s biggest home-loan lender.

Though Countrywide is the biggest lending company involved, it's not the only company under investigation. CNN Money reports that the FBI is looking into the lending practices of a total of 16 mortgage companies.

As other major financial institutions continue to experience the negative effects of the subprime mortgage market, the FBI would not release the names of the lenders under investigation.

"The FBI has been investigating potential fraud in the mortgage/sub-prime lending industry, however, we can not confirm or deny which companies are under investigation," FBI spokesman Richard Kolko told CNN.

Click here for more information.

--Bridget O'Sullivan